Rhetoric and Reality: The World Bank's New Concern for the Poor

NACLA Report on the Americas, May/June, 1996

After years of spreading the gospel that the revival of
economic growth would be a cure-all for the region's ills,
the World Bank and the Inter-American Development Bank (IDB)
have begun to change their tune. These multilateral
development banks, which used to plow most of their money
into the construction of bridges and dams, nowadays espouse
the need to improve the welfare of ordinary citizens. Their
publications are full of buzzwords such as "equity,"
"capacity-building," "decentralization" and "efficiency." As
this NACLA report details, however, the reality behind the
rhetoric is less heartening.

After more than a decade of trade liberalization, state
cutbacks, and deregulation, 200 million Latin Americans--
nearly half the region's population--live in poverty, with
monthly incomes of $60 or less. It is estimated that by the
year 2000, seven out of ten Latin Americans will not be able
to meet their basic daily nutritional needs. The World Bank
and the IDB fear that this widespread misery side-by-side
with the conspicuous consumption of a small elite is a
dynamite stick waiting for a match. A social explosion would
be bad for U.S. investors in the region, and could spell
disaster for the whole neoliberal economic program that these
organizations have worked so assiduously to cultivate. Far
from having an epiphany about the need to pursue alternative
paths to social development, the multilateral lending
institutions have developed a coherent set of social policies
with the explicit purpose of shoring up free-market economics
in Latin America.

The World Bank recipe for social policy is essentially two-
fold: targeted anti-poverty programs and privatization of the
social-security network. Poverty-alleviation programs--
especially in their incarnation as centrally controlled
social-investment funds--have been strong on propaganda, but
weak on results. Not only are these programs the equivalent
of putting a band-aid on a hemorrhaging wound, but the cause
of the bleeding--the neoliberal economic system--is never
called into question. Efforts to privatize the education,
health-care and pension systems represent an incursion of a
market ethos into the social sphere. Privatization has led to
a massive transfer of resources from the public to private
sector, and sharpened the inequities between rich and poor.
In the process, the whole notion of universal access to basic
social services is being gutted in favor of a model based on
the individual's ability to pay.

Both anti-poverty programs and privatization have a strong
component of decentralization. Few on the left or right
oppose decentralization in principle, but the way the process
is being carried out in Latin America is cause for concern.
In the neoliberal playbook, decentralization often means
turning over tasks--but not decision-making or funds--to the
local level. The state is handed an excuse to dump its basic
civic responsibilities onto the laps of cash-starved, over-
extended local governments and grassroots organizations.

This brand of social reform may sound familiar to U.S.
citizens. The U.S. health-care system is increasingly
organized according to market criteria while decentralization
and business-state partnerships are the rage in U.S.
educational policy. Meanwhile, government-run entitlement
programs such as Medicare, Medicaid and welfare have come
under unprecedented attack. While in the United States the
conservative razor blade has tattered the social-security
net, in Latin America it has all but disappeared for most
people.

In the final analysis, social policy cannot be divorced from
the dominant economic development model. The possibilities
and limits of World Bank and IDB social policy are defined by
the neoliberal economic agenda in which it is rooted. As the
case of Chile demonstrates, neoliberal social policy allows
the government to abdicate one of its principal social
functions: promoting a genuine redistribution of income.